What Disney’s Theme Parks Reveal About New CEO Bob Chapek

Theme parks and resorts aren’t likely top of mind for the industry set when they think of Disney. But in light of the recent (and very swift) appointment of parks and consumer products head Bob Chapek to succeed Bob Iger as Disney CEO, Chapek’s recent interviews at the parks offer a few insights about the seventh-ever leader of the Mouse House.

Disney’s many parks worldwide — which, as a corporate entity, merged with the consumer products segment in 2018 — are the place where the company tangibly engages with fans of “Star Wars” and “Toy Story” and Mickey Mouse. (Even cerebral FX boss John Landgraf had a good time at the “Avatar” attraction at Animal Kingdom in Florida.)

Prior to Tuesday’s news that suddenly put Chapek front and center on the screens of CNBC and Bloomberg TV and on the pages of the New York Times, the parks leader does not appear to have been much for the spotlight. Most of his publicly available interviews prior to the announcement have been with theme park trade publications and Disney fan sites.

But it’s in those interviews that Chapek shares his guiding philosophy for managing not just theme park operations but Disney’s brand as a whole. When asked how he melds the many different divisions at Disney in his work at the parks, Chapek revealed the “secret” of the Walt Disney Co.

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“We all have a North Star, and we all paddle in the same direction to get to that North Star, if you will,” said Chapek last May, in an on-camera interview with Disney enthusiast site LaughingPlace and other theme park outlets about the opening of the eagerly awaited Star Wars: Galaxy’s Edge attraction at Disneyland in Anaheim.

“We’re not silo’d; we’re like this,” Chapek said, interlacing his fingers together, “with Marvel. We’re like this with our friends at Pixar. We’re like this with our friends at Lucas[film], because we’re all about storytelling. We do it in a physical way. We like to say that we’re the physical manifestation of the magic.”

Disneylands worldwide are tremendously lucrative. Disney’s parks, experiences and consumer products division brought in more revenue than any other in fiscal 2019: $26.23 billion.

That outpaces media networks, which includes ABC and ESPN ($24.83 billion), studio entertainment, in a year in which Disney again logged multiple billion-dollar hits at the box office ($11.13 billion), and the direct-to-consumer and international unit, which includes the much-talked-about Disney Plus ($9.35 billion).

It’s that very last segment — direct-to-consumer — which has been hogging the spotlight for the last year or so, as Iger focused on launching the streaming platform into the competitive direct-to-consumer market last November.

But theme parks and consumer products together accounted for over 37% of Disney’s $69.57 billion in revenue last year; by operating income, it was the second-most lucrative segment, with $6.76 billion, or over 45% of Disney’s $14.87 billion in 2019 operating income. (Even prior to the addition of consumer products, the theme parks and resorts division typically brought in the second-most revenue and operating income annually.)

In addition to Galaxy’s Edge, Chapek — who has been quietly steering the massive division for the last five years — also presided over the opening of Shanghai Disney Resort in 2016 and the expansion of the Disney Cruise Line fleet, which has nearly doubled during that time.

During the May 2019 interview, Chapek went on to emphasize that Disney’s strength comes not from its individual operating units but from its overall, cohesive brand, and indicated that he is happy to use the company’s vast wealth of intellectual property — which includes Marvel, Pixar, Lucasfilm and Disney Animation — to its advantage.

“We’ve got an embarrassment of riches,” said Chapek. “We don’t want to do anything that anybody else can do. A lot of times, people say, ‘Well, why does everything [at Disney parks] have to be franchise-oriented?’ Because that’s our barrier to entry. Because if any of our competitors had our intellectual property, guess what they would be doing? The exact same thing we’re doing. But they don’t have it. We do.

“So we’re going to build it, we’re going to sustain it, we’re going to create this world where everybody works together to create storytelling across time, across territories, geographies — and across lines of business — to create something that’s bigger than any one of those individual pieces. And that’s why we have a franchise orientation, and frankly, that’s why the Walt Disney Co. far and away outperforms all of our peers.”

The “Star Wars” lands built into the U.S. parks were expected to be a major catalyst for the division last year. But the 2019 hike in ticket prices — taking some tickets to over $200 a pop for the first time in history — meant that fewer people visited Disney parks and resorts even as the average visitor spent more on tickets and food and toys.

Iger, on the fourth-quarter call last November, acknowledged the lower yearly attendance and higher tickets prices, indicating that the pricier tickets are intended to spread out demand and encourage visits during off-peak periods. (He noted that visitors were also likely waiting for the parks’ second “Star Wars”-based ride, Rise of the Resistance, to open.)

Still, the Millennium Falcon: Smuggler’s Run attraction notably carried 1.7 million people in its first few months, which Iger hailed as a success.

“We talk a lot about the Disney bubble: When somebody comes to Disney, we don’t define our day as Attraction A plus Attraction B plus Attraction C and that’s your utility of how you enjoy your day,” said Chapek in a media roundtable with Attractions Magazine and other theme park publications last August, close to the Florida opening of Star Wars: Galaxy’s Edge at Walt Disney World. He is a proponent of “experiential things,” including the seamless incorporation of sponsors.

“Having a good commercial partner is one thing, but having a good storytelling partner is a whole ‘nother thing,” he said in a separate interview, when discussing the Coca-Cola bottles styled like spherical thermal detonators that are sold at Galaxy’s Edge and are re-sold on eBay at astronomical prices.

How Chapek’s approach to synergy will play into the further integration of Disney’s brands, including the ongoing meshing of its 21st Century Fox assets, remains to be seen. But he is unlikely to drastically change course in the near term.

Calling Iger’s legacy “profound,” Chapek told CNBC shortly after the official handover that he believes his role is to “take the strategic pillars [Iger] has so well established over the last 15 years and continue to work on those and implement those in the marketplace — most importantly, our direct-to-consumer initiatives — but at the same time, look around the corner for what disruption might be going on in the marketplace that would necessitate a fresh look at those things.”

“But right now, the course that Bob [Iger] has laid is one we fully intend to follow and will pay dividends for our shareholders for years to come.”